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| | US Market | The major U.S. index futures are pointing to a lower opening on Friday, with sentiment suggesting that the markets are still concerned about the softness in the Chinese economy. Global cues are negative, with Asian stocks declining, while the European markets are also seeing notable weakness. Earnings news of the day has also been mixed. The absence of any major catalysts could push traders to the sidelines, especially ahead of the upcoming week's FOMC meeting.
U.S. stocks declined on Thursday, with weak Chinese manufacturing data weighing on the markets. The major averages opened lower after the Chinese data and a domestic report showing that jobless claims rose by less than expected. After declining steadily till late trading amid the release of existing home sales data, the indexes trimmed some of their losses yet closed notably lower.
The Dow Industrials ended down 175.99 points or 1.07 percent at 16,197 and the S&P 500 Index closed 16.40 points or 0.89 percent lower at 1,827, while the Nasdaq Composite ended at 4,219, down 24.13 points or 0.57 percent.
Twenty-three of the thirty Dow components closed lower, with Visa (V), American Express , DuPont and JP Morgan Chase leading the slide. On the other hand, AT&T (T) and Verizon rose notably.
Airline, basic material, Oil service, Semiconductor and financial stocks were among the worst performers of the session, while Gold and railroad stocks bucked the downtrend.
On the economic front, jobless claims rose to 326,000 in the week ended January 18th from 325,000 in the previous week. At the same time, the four-week average slipped to 332,000 from 335,000. Continuing claims calculated with a week's lag rose by 34,000.
The National Association of Realtors reported that existing home sales came in at a seasonally adjusted annual rate of 4.87 million units in December. The November reading was downwardly revised by 80,000 to 4.82 million units. Single-family sales rose 1.9 percent, while condominium/co-operative sales declined 5 percent. First time buyers accounted for 27 percent of the total, the lowest ever contribution. Inventories as measured by the months of supply slid to 4.6 months in December from 5.1 in November, the lowest inventory levels since February 2013.
The Conference Board reported that its leading economic indicators index for the U.S. rose 0.1 percent month-over-month in December following a 1 percent increase in November. The December reading was helped by positive contributions by the financial components, while consumer expectations for business conditions and residential construction continued to pose risks. The coincident economic indicators index rose 0.4 percent and the lagging economic indicators index was up 0.3 percent.
Through yesterday's decline, The Dow Industrials was supported by its 50-day MA (currently at 16,153), and the index bounced off this level to close at 16,197. In the eventuality of the index retreating, the 50-day MA could serve as a strong support level. On the upside, the index has resistance around 16,292, 16,355, its 21-day MA of 16,423, 16,475, 16,532 and 16,600.
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| | Stocks in Focus |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Microsoft (MSFT) reported second quarter non-GAAP earnings of 78 cents per share on GAAP revenues of $24.52 billion. The results exceeded estimates.
Starbucks (SBUX) reported first quarter earnings of 71 cents per share on revenues of $4.2 billion, up 12 percent. The earnings exceeded estimates, while the revenues were below expectations. The company reaffirmed its 2014 guidance that calls for revenue growth in excess of 10 percent and comparable store sales growth in the mid-single digit. The company now expects earnings in the range of $2.59-$2.67 per share. The guidance was lukewarm.
Bristol-Myers Squibb (BMY) reported fourth quarter results that topped estimates. The company also confirmed its 2014 earnings guidance that was in line.
Procter & Gamble (PG) reported second quarter earnings that exceeded estimates, while its revenues were shy of estimates. The company affirmed its 2014 guidance.
Xerox (XRX) reported fourth quarter earnings that came in line with estimates. However, revenues were below estimates. The company confirmed its in line 2014 adjusted earnings guidance, while its board announced a 8.7 percent increase in its cash dividend.
Honeywell (HON) reported fourth quarter adjusted earnings that exceeded estimates and sales were also ahead of estimates. The company confirmed its 2014 guidance that however, is lukewarm.
Juniper Networks (JNPR) reported fourth quarter non-GAAP net income of 43 cents per share on revenues of $1.27 billion. For the first quarter, the company expects non-GAAP earnings of 27-30 cents per share on revenues of $1.12 billion to $1.16 billion. The results exceeded estimates, while the guidance was in line.
E*TRADE (ETFC) reported better than expected fourth quarter results.
International Game Technology (IGT) reported first quarter adjusted earnings of 25 cents per share on revenues of $541 million. The results trailed expectations. The company said it is unable to provide full year earnings guidance, citing items that are currently indeterminable. That said, the company said it expects to hit the low end of its previously announced guidance, given the declining gross gaming revenue trends.
Maxim Integrated (MXIM) reported second quarter adjusted earnings of 36 cents per share on revenues of $620 million. For the third quarter, the company expects non-GAAP earnings of 37-41 cents per share on revenues of $590 million to $620 million. The results trailed expectations and the guidance was weak.
KLA-Tencor (KLAC) reported second quarter non-GAAP earnings of 83 cents per share on revenues of $705 million. Both earnings and revenues were ahead of estimates.
Altera (ALTR) reported fourth quarter earnings of 31 cents per share on sales of $454.4 million. The results beat estimates. However, the company also said it expects first quarter sales to decline 2-6 percent sequentially, trailing estimates.
Compuware (CPWR) reported third quarter non-GAAP earnings of 17 cents per share on revenues of $250.5 million, down 2.9 percent year-over-year. The earnings were above estimates, while the revenues trailed expectations.
Williams (WMB) said its board approved a 5.9 percent increase in its quarterly dividend to $0.4025 per share. The company also said it continues to expect to increase its full year dividend by 20 percent each in 2014 and 2015. Arthur J. Gallagher (AJG) announced a 1 cent per share increase in its quarterly dividend to 36 cents per share.
Valeant Pharma (VRX) announced the completion of its acquisition of Solta Medical (SLTM) for $2.92 per share in cash or $250 million in aggregate.
Home Depot (HD) announced the acquisition of Blinds.com. The company did not announce the terms of the deal. Meanwhile, Qulacomm (QCOM) said it has acquired a patent portfolio from Hewlett-Packard (HPQ) and Palm. |
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| | European Market | | European stocks opened higher, but they have been seeing some volatility in early trading amid a lack of any market moving domestic catalysts. The averages are currently-trading notably lower. |
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| | Asian Markets | | | | USDCAD | USDEUR | USDGBP | USDJPY |  |  |  |  | | Please click on the images to view our interactive charts | | | Most major Asian markets retreated following an increase in risk aversion amid fears concerning a slowdown in global growth. Meanwhile, the Chinese and the Taiwanese markets bucked the downtrend.
The Japanese market retreated notably as the yen firmed up. Japan’s Nikkei 225 average opened lower and dipped sharply in early trading. After moving sideways in the morning, the index declined steadily in the afternoon session before closing down 304.33 points or 1.94 percent at 15,392. The market witnessed broad based weakness, with most yen-sensitive sectors moving to the downside.
Yaskawa Electric fell 6.45 percent and was the biggest decliner among the index components. Daiichi Sankyo fell over 6 percent after the FDA banned production from one of its Ranbaxy unit’s plants in India.
Australia’s All Ordinaries languished below the unchanged line for much of the session, barring a brief sojourn above the unchanged line in the mid-session. The index closed 21.20 points or 0.40 percent lower at 5,254. Most sectors declined, led by financial stocks. On the other hand, material and industrial stocks witnessed some strength.
Hong Kong’s Hang Seng Index ended at 22,450, down 283.34 points or 1.25 percent. Meanwhile, China’s Shanghai Composite Index added 12.21 points or 0.60 percent before closing at 5,254, as recent efforts to rein in money market rates continued to be market positive.
In major corporate news from the region, Korean giant Samsung Electronics reported fourth quarter profits that increased at a notably slower rate than in the third quarter. The company also forecast a weak performance for the first half of the current fiscal. |
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| | Currency and Commodities Markets | | Crude oil futures are sliding $0.18 to $97.14 a barrel after advancing $0.59 to $97.32 a barrel on Thursday.
The previous session’s increase came amid the release of the oil inventory report for the week ended January 17th, which showed that crude oil stockpiles rose by 1 million barrels to 351.2 million barrels. Inventories are now in the upper half of the average range for this time of the year.
Gasoline inventories increased by 2.1 million barrels and were well above the upper limit of the average range. Meanwhile, distillate inventories fell by 3.2 million barrels and were well below the lower limit of the average range. Refinery capacity utilization averaged 90.3 percent over the four weeks ended January 17th compared to 91.8 percent over the four weeks ended January 10th.
Gold futures are climbing $4.10 to $1,266.40 an ounce. In the previous session, gold jumped $23.70 to $1,262.30 an ounce.
Among currencies, the U.S. dollar is trading at 102.57 yen compared to the 103.26 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3677 compared to yesterday’s $1.3696. |
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